Round up of today’s market news

North American News

US stock indices close mixed, but down for the week

• Stocks fall for the week led by they Nasdaq index

The major US stock indices are closing the day with mixed results, but all are down for the week.

A snapshot of the closing level shows:

• Dow industrial average -366.71 points or -1.12% at 32417.60
• S&P index -19.86 points or -0.48% at 4117.36
• NASDAQ index rose 47.4 points or 0.38% at 12643.00

For the trading week, the major indices or close lower led by the NASDAQ index:

• Dow industrial average fell -2.14%. The decline comes after -1.61% for last week
• S&P index fell -2.53%.That decline comes after a -2.39% fall last week.
• NASDAQ index fell -2.62%.That decline comes after a -3.16% fall last week.

For the month of October, the major indices are also on track for a negative close:

• Dow industrial average -3.25%
• S&P index -3.98%.
• NASDAQ index -4.36%.

Each of the major indices are on pace for the 3rd consecutive monthly down close.

For the trading year:

• Dow industrial average is down -2.20%
• S&P index is up 7.24%
• NASDAQ index is up 20.80%

Key earnings releases scheduled for the week starting October 30

• Another big week for earnings next week

Below is some of the major anticipated releases (*denotes release before the open).

Monday

• SoFI *
• McDonald’s”
• Western Digital”
• Pinterest

Tuesday

• Pfizer*
• Caterpillar*
• BP*
• AMD
• First Solar

Wednesday

• CVS *
• Humana *
• Paypal
• Roku
• Qualcomm

Thursday

• Palantir *
• Shopify *
• Lilly *
• Apple
• Starbucks

Atlanta Fed GDPNow initial estimate for Q4 growth at 2.3%

• The Q3 estimate got within 0.5% of the actual number

The Atlanta Fed GDPNow initial estimate for Q4 growth debuts at 2.3%.In their own words

The initial GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2023 is 2.3 percent on October 27.The initial estimate of third-quarter real GDP growth released by the US Bureau of Economic Analysis on October 26 was 4.9 percent, 0.5 percentage points below the final GDPNow model nowcast released on October 25.

October final UMich US consumer sentiment 63.8 vs 63.0 expected

• Final UMich consumer sentiment data for October 2023

• Prelim was 63.0
• Prior was 68.1

Details:

• Current conditions 70.6 vs 66.7 prelim (71.4 prior)
• Expectations 59.3 vs 60.7 prelim (66.0 prior)
• 1-year inflation 4.2% vs 3.8% prelim (3.2% prior)
• 5-10 year inflation 3.0% vs 3.0% prelim (2.8% prior)

US September PCE core +3.7% vs +3.7% expected

• US September PCE data

• Prior was +3.9%
• PCE core MoM +0.3% vs +0.3% expected
• Prior MoM +0.1%
• Headline PCE +3.4% vs +3.4% expected (prior +3.5%, revised to 3.4%)
• Deflator MoM +0.4% vs +0.3% expected (prior +0.4%)

Consumer spending and income for September:

• Personal income +0.3% vs +0.4% expected. Prior month +0.4%
• Personal spending +0.7% vs +0.5% expected. Prior month +0.4%
• Real personal spending +0.4% vs +0.1% prior

General Motors Cruise to halt self-driving operations across all fleets

Two days ago California told GM’s Cruise unit to remove its driverless cars from state roads. California’s Department of Motor Vehicles (DMV) :

• “Based upon the performance of the vehicles, the department determines the manufacturer’s vehicles are not safe for the public’s operation”
• citing “an unreasonable risk to public safety”

Morgan Stanley projects a higher US dollar through to the end of the year

Morgan Stanley are forecasting no change to the Fed Funds rate at the upcoming Federal Open Market Committee (FOMC) meeting 0- statement due on November 1.

No change is an overwhelming consensus and market expectation also.

MS main points:

• Fed is expected to acknowledge recent improvement in economic activity
• Peak rate is in, see an extended hold into 2024
• Expect a higher US dollar into the end of 2023, citing an even wider yield differential with other FX, and in particular declining sentiment in the eurozone vs. the US
• Wary of long positioning in the USD though, say with the Fed on hold now there is less space for central bank policy expectations to shift in favour of the dollar

The conflicting data points from the US that will keep the Federal Reserve on hold

In response Fitch ratings, first on the headline GDP result:

• stunningly-strong 4.9% annualised gain in third-quarter GDP
• Economic growth transitioned from resilience to reacceleration this quarter, defying the Federal Reserve’s aggressive tightening cycle and tighter financial conditions
• suggests that the Fed needs to do even more

And then on the detail re inflation, the Core PCE down to 2.4% :

• just as notable was the slowdown in core PCE

Fitch concludes, on balance:

• Under those circumstances, the Fed can afford to stay on the sidelines

Commodities

Gas: Risks skewed to the downside – ANZ

The risk of supply disruptions is likely to keep volatility high in global gas markets, economists at ANZ Bank report.

Gas supply risks remain

Global gas markets are entering the northern winter in good shape, but this does not diminish the supply risks from geopolitical tensions.

We see more downside risks than upside, and the balance could shift quickly should weather and supply issues go against the market.

While unlikely to return to levels seen 12 months ago, European and Asian prices are likely to remain elevated leading into the heating season.

WTI crude oil futures settle at $85.54

• Up $2.33 or 2.8%

The price of WTI crude futures is settling at $85.54, up $2.33 or 2.80%. That is above the August high of $84.85 tilting a bias more to the upside. Fundamentals remain a driving force. On declines, the markets are worried about slower global economic growth and a de-escalation of Middle East anxiety.

Baker Hughes US weekly oil rig count 504 vs 502 prior

• Weekly US oil and gas drilling data

• Oil rigs +2
• Gas rigs -1
• Total rigs 625 vs 624 prior

Oil climbs up by over 2% but still poised for a weekly drop

• Oil prices are rallying ahead of the weekend again

WTI crude itself is up roughly 2.5% to $85.28 as oil is seeking a rebound towards the end of the week.The low this week nearly touched the $82 level, where we also saw price find a rebound at the start of the month:

The tensions in the Middle East are still somewhat persisting, even if they haven’t quite yet escalated this week.There’s still lingering uncertainty and that is likely helping to keep oil underpinned for now and more so ahead of the weekend, where traders might be afraid of the situation worsening in the Israel-Hamas conflict as well as general tensions surrounding the region.

EU News

France October consumer confidence 84 vs 83 expected

• Latest data released by INSEE – 27 October 2023

• Prior 83

French household confidence improved slightly in October but still remains well below the long-term average reading of 100. Here’s the breakdown of the details:

Spain Q3 preliminary GDP +0.3% vs +0.2% q/q expected

• Latest data released by INE – 27 October 2023

• Prior +0.5%; revised to +0.4%
• GDP +1.8% vs +1.6% y/y expected
• Prior +2.2%; revised to +2.0%

Brandenburg October CPI +4.6% vs +5.6% y/y prior

• Latest data released by Destatis – 27 October 2023

The German state readings are supposedly only due on Monday next week, so this is a surprise early release. The annual reading points to a further softening in price pressures but they are still largely elevated as a whole. The monthly reading shows a flat estimate, so that’s a welcome development instead. But we’ll see if this can keep up going into next year, and if the annual reading can move towards 2% eventually.

UBS says its way too early to begin talking about European Central Bank interest rate cuts

UBS describe the rate decision from the ECB meeting on Thursday as a non-event. Highlights from the note:

• the remarks following emphasised again the dour state of the euro area economy
• Lagarde pointed to the need for steady policy
• the Bank is data-dependent
• inflation outlook will be closely observed (UBS add that the CPI print due on October 31 is the next major data point)

Other News

China September Industrial Profits +11.9% y/y

The YTD industrial profits figure is still down, taking some of the shine off the much better September alone figure.

• +11.9% y/y for September month alone
• January – September IP -9.0% y/y (prior -11.7%)

Chinese state media reports that China’s former Premier Li Keqiang has died

Reuters conveying the info.

Li Keqiang was China’s former Premier (2013 to 2023) not too long ago when China was still expressing an interest in further opening up and encouraging enterprise in the country. He was known as a go-to guy economic ‘fixer’.

China financial press says the PBOC is likely to cut the RRR in Q4

This week it’s the China Securities Journal:

• PBOC likely to reduce the reserve requirement ratio (RRR) in Q4
• Will do so to support government bond issuance

Australian data: Q3 PPI 1.8% q/q (prior 0.5%) 3.8% y/y (prior 3.9%)

That’s a very substantial q/q rise for the PPI.

Statistics (ABS), some commentary from their report:

• higher prices for construction, petroleum and energy were compounded by broad-based price increases in services, particularly health and childcare
• New financial year contract negotiations, indexation clauses, annual wage cost reviews and increasing operating costs contributed to price rises across services industries.

New Zealand data: October Consumer Confidence rises to 88.1 (prior 86.4)

ANZ Consumer Confidence in New Zealand for October 2023

A small rise for consumer sentiment on the month, still at weak sort of levels though. Also up were consumer inflation expectations, +0.3% to 4.5%, undoing last month’s fall.

BOJ likely to raise CPI forecast to 2% range – report

• Earlier reports indicated something similar

Nikkei is out with a Bank of Japan scoop ahead of Tuesday’s meeting and decision.

• The Bank of Japan is likely to raise its consumer price index outlook for fiscal 2024 (starting in March) to the 2% growth range at next week’s meeting
• The current forecast is 1.9%
• Today’s Tokyo CPI data showed 3.3% y/y inflation and 2.7% ex-fresh food vs 2.5% expected
• The latest forecasts will take into account government subsidies for electricity and gas
• The BOJ will also discuss yield curve control and revising it

Japan’s biggest life insurers plan to add to JGB holdings but guarded against policy shift

• Nippon Life, Dai-Ichi Life, and Meiji Yasuda Life are among those who said they aim to buy more long-dated JGBs amid the surge higher in yields

This relates to their respective company strategies for the fiscal year ending in March, with Nippon Life stating that they will focus purchases on 30-year JGBs as the current yield of above 1.8% is “good in terms of absolute level”. But they do add that now is “not the time to buy aggressively” as the firm’s base case is for the BOJ to begin normalising policy between April to September next year.

Japan inflation data – Tokyo area CPI for October headline 3.3% y/y vs. 2.8% prior

The only ‘expected’ was for the ‘core’ (i.e. excluding fresh food), it came in higher.

• headline rate was in line with its previous reading
• core-core (i.e. excluding food & energy, this is the closest measure to US core inflation) came in above the prior

Japan Finance Minister Suzuki says excessive FX volatility is undesirable

Japan Finance Minister Suzuki

• Excessive FX volatility is undesirable
• Important for currencies to move stably reflecting fundamentals
• No comment on FX levels
• No comment on FX intervention
• Will take thorough steps on FX with a strong sense of urgency

Cryptocurrency News

XRP price could be seeing red if Ripple whales continue their 100 million XRP selling spree

• XRP price has seen sideways action for the past three days, but indicators suggest the bullishness is waning.
• Ripple whales have been selling for the past month, dumping nearly $55.2 million worth of XRP.
• US SEC is seeking $770 million to settle the lawsuit against Ripple.

XRP price his seemingly prone to selling from one of its most important cohorts which has also been responsible for its rallies. Plus, the altcoin is testing a key support level, and by the look of the indicators, a bearish turnout is not out of the realm of possibility.

Daily Digest Market Movers: Ripple whales move to sell

Over the past month, Ripple whales have been moving their holdings, and between September 26 and October 27, the cohort has managed to reduce their balance by 100 million XRP. The addresses holding between 10 million XRP to 100 million XRP have shed about $55 million worth of XRP, bringing their balance down from 5.36 billion XRP to 5.26 billion XRP.

Litecoin address activity explodes, signaling rising LTC circulation among traders

• Litecoin address activity and whale transactions hit levels previously seen in June 2023. 
• Dormant LTC tokens are on the move, indicating that a higher volume of Litecoins are circulating among traders. 
• LTC price is likely to recover with bullish on-chain metrics.

Litecoin price reversed its gains on Friday, despite on-chain activity signaling rising interest from market participants. LTC’s on-chain address activity and whale transactions spiked, hitting levels seen nearly four months ago.

Litecoin on-chain metrics signal bullish outlook

Based on data, LTC noted a rapid rise in on-chain movement towards the end of the week. Address activity and whale transactions hit levels seen in June 2023.

Santiment charts reveal that dormant LTC tokens witnessed a big spike, indicating that more coins are being circulated among market participants. After trending below 5,000 for the past month, on October 26,the total volume of whale transactions, valued at $100,000 or higher, hit 7,418 in Litecoin. Another key milestone was the movement of dormant LTC tokens. The most number of LTC wallets that were inactive previously moved LTC – the highest volume in the past six weeks.

According to Santiment, daily active addresses climbed to 319,000, the largest spike since June 2023. These on-chain metrics support a bullish outlook on LTC while the altcoin’s price struggles to recover.

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